• Latest
  • Trending
  • All
  • News
  • Business
  • Lifestyle
Trump Sec Recounts Time Biden Creepily Touched Her, Says It Would Be 'Sexual Harassment' Under His Own Proposals

Days After Biden’s Mass Student Debt Cancellation, Borrowers in 13 States Learn They Could Face Big Tax Bill

August 30, 2022

California Cloud Seeding Company Now Entangled in Texas Flood Claims

July 21, 2025

Trump Pressures Commanders to Revert Name in Stadium Talks

July 21, 2025
Chinese Dual Citizen Pleads Guilty To Stealing Sensitive Nuke Launch Detection Tech

Chinese Dual Citizen Pleads Guilty To Stealing Sensitive Nuke Launch Detection Tech

July 21, 2025
MICHELE STEEB: Gov. Newsom’s Broken Promise On Homelessness

MICHELE STEEB: Gov. Newsom’s Broken Promise On Homelessness

July 21, 2025
EXCLUSIVE: Watchdog Demands Probe Of Soros-Backed Nonprofits Allegedly Abusing Tax-Exempt Status

EXCLUSIVE: Watchdog Demands Probe Of Soros-Backed Nonprofits Allegedly Abusing Tax-Exempt Status

July 21, 2025
Rahm Emanuel Gives Megyn Kelly Biggest Hint Yet About 2028 By Siding With Conservatives On Hot-Button Issues

Rahm Emanuel Gives Megyn Kelly Biggest Hint Yet About 2028 By Siding With Conservatives On Hot-Button Issues

July 21, 2025
Taxpayer-Funded Group Teaches Marxist, ‘Queer’ Resistance At Anti-Trump Summer Camp

Taxpayer-Funded Group Teaches Marxist, ‘Queer’ Resistance At Anti-Trump Summer Camp

July 21, 2025
Trump Forces Employers To Stop Turning Blind Eye To Illegal Workers

Trump Forces Employers To Stop Turning Blind Eye To Illegal Workers

July 21, 2025
Trump Has Golden Opportunity To Blow Up Climate Agenda’s Crown Jewel

Trump Has Golden Opportunity To Blow Up Climate Agenda’s Crown Jewel

July 21, 2025
Hakeem Jeffries Admits Democrats Don’t Care About Epstein

Hakeem Jeffries Admits Democrats Don’t Care About Epstein

July 21, 2025
Mike Johnson Marks Anniversary Of Biden Dropping Out With 14-Minute Montage Of Dems Insisting He Was Fit As A Fiddle

Mike Johnson Marks Anniversary Of Biden Dropping Out With 14-Minute Montage Of Dems Insisting He Was Fit As A Fiddle

July 21, 2025
Biden-Appointed Judge Orders Feds To Keep Paying Attorney Fees For Mentally Incompetent Illegals In Detention

Biden-Appointed Judge Orders Feds To Keep Paying Attorney Fees For Mentally Incompetent Illegals In Detention

July 21, 2025
  • Donald Trump
  • State of the Union
  • Elon Musk
  • Tariffs
  • Congress
  • Faith
  • Immigration
Monday, July 21, 2025
  • Login
IJR
  • Politics
  • US News
  • Commentary
  • World News
  • Faith
  • Latest Polls
No Result
View All Result
IJR
No Result
View All Result
Home Commentary

Days After Biden’s Mass Student Debt Cancellation, Borrowers in 13 States Learn They Could Face Big Tax Bill

by Western Journal
August 30, 2022 at 1:20 pm
in Commentary
247 5
0
Trump Sec Recounts Time Biden Creepily Touched Her, Says It Would Be 'Sexual Harassment' Under His Own Proposals

WASHINGTON, DC - AUGUST 09: U.S. President Joe Biden attends a signing ceremony for the CHIPS and Science Act of 2022 on the South Lawn of the White House on August 9, 2022 in Washington, DC. The centerpiece of the legislation is $52 billion in funding aimed at boosting U.S semiconductor chip manufacturing and continued scientific research in the field to better compete with Chinas increasing dominance in the sector. (Photo by Chip Somodevilla/Getty Images)

491
SHARES
1.4k
VIEWS
Share on FacebookShare on Twitter

Though President Joe Biden just announced student debt forgiveness, some states may have to consider student loan debt forgiveness a taxable event, which would then detract from the promised $10,000 in debt cancelation.

When the Biden administration announced the debt forgiveness plan, it was confirmed that it would not be a taxable at the federal level for borrowers, Forbes reported.

But taxes at the state level are different and could offer a setback for borrowers in at least 13 different states, the Tax Foundation reported.

“Preliminarily, it appears that 13 states have the potential to tax discharged student loan debt, though the final count could be significantly smaller if states make legislative changes or administratively determine that the debt forgiveness can be excluded, or if conformity dates are updated retroactively,” the Tax Foundation reported.

Under the current laws for many states, the tax code typically treats forgiven or canceled debt as taxable income, according to the Tax Foundation.

“If a borrower has debt forgiven, it is treated as if the borrower earned additional income in the previous tax year equal to the amount of forgiven debt. For example, if a borrower with an annual taxable income of $35,000 owes $20,000 in debt that is subsequently forgiven or canceled, the $20,000 in debt is added to their taxable income for a total of $55,000,” the Tax Foundation explained.

The Tax Foundation listed 13 potential states where the $10,000 in student loan debt forgiveness could be taxed, according to the state laws.

Pennsylvania would have the lowest possible tax of $307.

In Arkansas, Kentucky, Massachusetts, Mississippi, Virginia and Wisconsin, debt forgiveness could be taxed between $500 to $575, depending on the specific state.

In Idaho, the tax would be $600, while in West Virginia it would be $650, and in New York, it would be about $685.

Do you live in one of these states?

Completing this poll entitles you to our news updates free of charge. You may opt out at anytime. You also agree to our Privacy Policy and Terms of Use.
Yes: 25% (1 Votes)
No: 75% (3 Votes)

South Carolina would have a tax of $700, while Minnesota and Hawaii would have the highest taxes on debt forgiveness at $985 and $1,100 respectively.

But though the state tax laws are a definite hurdle for the loan forgiveness plan, the Tax Foundation also reported that some states may eventually take action to avoid having these taxes on the canceled debt.

“In the coming weeks and months, we are likely to see states issue guidance on the treatment of discharged student loan debt,” the Tax Foundation noted.

In fact, a problem very similar to this happened during the pandemic with the Paycheck Protection Program, Forbes reported.

The PPP loan forgiveness was not federally taxed, but some states could have legally taxed it at the state level.

When several states ran into this issue, some decided to pass legislation to conform state tax law to federal law, at least temporarily, so people could benefit from the federal program.

It has yet to be seen how states will now react to the student loan debt forgiveness structure, but this added complication should be a lesson for the Biden administration that such broad and expensive ideas are nearly never as simple as they seem once reality sets in.

With a sweep of the executive order wand, Biden thought he was setting up a plan that would make millions happy by forgiving chunks of debt.

But between political pushback on the plan and the complication of tax codes that could raise taxes on borrowers with forgiven debt, the administration has muddied the waters.

The comical part of it all is that $10,000 in student loan debt forgiveness barely scratches the surface of many individuals’ debt.

“The average federal student loan debt balance is $37,667 while the total average balance (including private loan debt) may be as high as $40,274,” the Education Data Initiative reported.

While that is the average, there are also more than 3 million people with student loan debt that is greater than $100,000, “with approximately 900,000 of that total holding student loan debt greater than $200,000,” Forbes reported.

So $10,000 in debt cancellation is knocking out hardly anything for millions of people.

In the meantime, the debt cancellation will either raise individuals’ taxes in several states or will complicate state tax laws by forcing state legislatures to recalibrate the tax codes.

No matter how it shakes out, the pitfalls and downsides of Biden’s plan have quickly come to the surface, showing that it might not be such a great and easy plan as Biden may have assumed.

This article appeared originally on The Western Journal.

Tags: Biden administrationcolleges and universitiesDebtJoe BidenStudentTaxes
Share196Tweet123
Western Journal

Western Journal

Advertisements

Top Stories June 10th
Top Stories June 7th
Top Stories June 6th
Top Stories June 3rd
Top Stories May 30th
Top Stories May 29th
Top Stories May 24th
Top Stories May 23rd
Top Stories May 21st
Top Stories May 17th

Join Over 6M Subscribers

We’re organizing an online community to elevate trusted voices on all sides so that you can be fully informed.





IJR

    Copyright © 2024 IJR

Trusted Voices On All Sides

  • About Us
  • GDPR Privacy Policy
  • Terms of Service
  • Editorial Standards & Corrections Policy
  • Subscribe to IJR

Follow Us

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
No Result
View All Result
  • Politics
  • US News
  • Commentary
  • World News
  • Faith
  • Latest Polls

    Copyright © 2024 IJR

Top Stories June 10th Top Stories June 7th Top Stories June 6th Top Stories June 3rd Top Stories May 30th Top Stories May 29th Top Stories May 24th Top Stories May 23rd Top Stories May 21st Top Stories May 17th